The practice of spreading money among different investments to reduce risk is known as _______.

Question

Quizplus · Accepted Answer

Diversification involves spreading money among different investments to reduce risk by investing in various assets such as stocks, bonds, and commodities across different industries and sectors. It helps to minimize the impact of negative events on an individual investment, thus providing a cushion to the overall portfolio. Risk aversion is a personal preference for avoiding risks and tends to be subjective, while securitization refers to the process of creating financial securities by pooling similar assets and selling them to investors. Sector rotation involves shifting investments from one sector to another based on economic or market trends.

The Practice of Spreading Money Among Different Investments to Reduce